Malaysia’s National Aerospace and Defence Industries (NADI) and Lion Air parent PT Lion Grup of Indonesia plan to establish a new low-fare airline in Malaysia named Malindo Airways, the new partners announced Tuesday in Kuala Lumpur. Scheduled to start flights next May out of Kuala Lumpur International Airport’s regional transit hub, Malindo would compete directly with AirAsia—the biggest low-fare carrier in the region—in its home market of Malaysia, as well as Indonesia, Thailand, Australia, India and Japan.

Fifty-one-percent owned by NADI—Malaysia’s largest MRO provider–and the balance by Lion Grup, Malindo would build its fleet by assuming some delivery positions held by Lion Air, which in February signed a record $22.4 billion order for 201 Boeing 737 MAX narrowbodies and twenty one 737-900ERs. The contract included options for 150 more airplanes and sealed the largest order ever for Boeing, both in terms of units and dollar value. At the time Lion Air operated or held orders for 178 Boeing 737NGs. Indonesia’s largest private carrier, Lion Air serves 72 destinations across Indonesia and regional Asia with its 737s and ATR 72 turboprops. It flew 27 million passengers last year.

Air Asia, meanwhile, holds firm delivery positions on 200 Airbus A320neos and has placed orders for 375 A320-family airplanes. It and its various subsidiaries now fly just over 100 A320s in the region.

Apart from airline operations, the Malindo joint venture calls for NADI and Lion Grup to partner in MRO provision, supply chain management and so-called human capital development. The partners expect it to boost NADI’s MRO operations run by AIROD Aerospace Technology (AAe), making it one of the largest independent MRO service providers in the region.

“As a leading MRO service provider in the region, NADI has always aspired to not just facilitate growth but also proactively stimulate growth, locally and regionally,” said NADI president Tan Sri Ahmad Johan. “The agreements signed today will not only help us expand our service offerings, but it provides us the necessary platform and resources to develop human capital that is necessary to fuel the industry in Malaysia, as well as through the region. The joint venture will benefit more than just two companies. This strategic partnership will benefit Malaysia and Indonesia, where these two companies are based, as well as the entire region that they will service.”